TRA response to HMRC Sanctions consultation

The TRA is responding to this consultation as the illicit trade in tobacco products affects our members more than any other retail sector in the country. Illegal tobacco hits legitimate retailers especially hard as tobacco products often make up over 40% of sales revenue in their stores. The potential profits of illicit tobacco are so great that there have been instances where shops are just fronts for illicit tobacco sales and have barely any legitimate products (including non-tobacco) for sale. This is especially important at a time when there are so many changes to tobacco packs. Plain packs make it much harder to tell the difference between real and fake cigarettes and minimum pack sizes are expected to increase the size of the illegal market even further.

The current legal threats against those who sell tobacco are clearly not strong enough as shown by the huge amount of illegal tobacco that is sold in the UK. £2.4 billion of tax was lost to the illegal trade last year which means retailers lost revenue of approximately £3.3 billion of which approximately £1.5 billion will be from small retailers of the type that the TRA represents.

Greater enforcement action was the second most favoured (79%) method of reducing the illicit trade but just 6% of shop owners have confidence in the enforcement work of Trading Standards.

The TRA thinks the measures in this consultation are good additions to the efforts to tackle illicit tobacco but also thinks that the government must look at this problem more widely. The TRA has previously suggested a number of measures that need to be part of the effort to fight the illicit trade.

These additional measures would mean that there could be more effective implementation of the sanctions discussed in this document. Efforts to combat illicit tobacco should also include:

- More resources for enforcement agencies, such as Trading Standards services (72 per cent of retailers do not believe that Trading Standards are tackling illicit tobacco effectively at present);
- A commitment to re-invest the proceeds of crime taken from convicted offenders in local enforcement services, such as Trading Standards;
- A statutory duty for Trading Standards to respond to retailers’ complaints about illegal traders, which should be monitored by HMRC; and
- A single point of contact for reporting those involved in the illicit trade to the appropriate authorities.